Views and analysis of Chinese politics and policy from inside China, outside the Beijing and Shanghai beltways

Thursday, 3 August 2017

In Nanjing, The State Steps Back In

There’s no revolution here in China—social, political or
economic. Transformation for China isn’t happening in the grassroots,[1]
or in the upper echelons of power.

But there is reform appearing in Chinese policymaking, in
the middle ranks of government, at the in-between. That’s occurring daily,
indirectly, and in response to local challenges.

There are good reasons for officials here to ponder and
practice what can be called a “policy renovation” in China—a rethinking of the
role of local government, and hope it can step back into areas it had vacated.

Both central and local officials are seeking to solve
problems they see as hampering their authority [职权] to rule.[2]
Local cadres and bureaucrats will attend to Beijing’s directives, of course;
but they also recognize that managing-down is often more crucial than managing-up
these days in PostModern China. That’s because political promotion for local
officials simply isn’t tied as much to sponsors as it was in years past; being
adept at problem-solving matters more, especially as China urbanizes. Local
policymakers are compelled to be more in touch with the street and communities
than in years past because the challenges of larger cities and new types of
residents absorb more time and resources, and cannot be left unattended.
Officials don't want to be seen as neglecting their neighborhoods because they know
that it’s the local that matters to residents, and what their superiors look at
when evaluating performance.

That sentiment to supervise seems to be the driving force of
an initiative in Nanjing, where officials are looking to hold property
management companies [物业公司] accountable
for their shortcomings in supervising the growing number of gated communities.

Nanjing officials are, as ever, alert to local
dissatisfaction. In 2016, an analysis of calls
to the city hotline noted that complaints
about their work topped the list of residents’ anger. According to that survey,
“the problem is mainly concentrated in the property management company's
inaction, arbitrary charges, poor service attitude, the community’s internal
environment and greening problems, the use of public facilities in residential
areas, [as well as shortcomings in] maintenance.”

Those problems have been continuing to plague many of the
1,357 firms here, which, according
to the city calculations, currently supervise more than 4,000 management
projects.

In theory, Nanjing enjoys a relatively decentralized
property service market, with citizens free to sign contracts with whatever
management company that they wish, for whatever specified time that both
parties agree to (usually a year or two, with the option to extend). At the end
of that period, the contract can be extended or terminated, depending on the
wishes of the residents.

But in practice, the situation is fraught with problems.

Despite the purportedly large number of choices, about a
dozen property management companies dominate the Nanjing marketplace, all of
them enjoying political connections with various departments and agencies. Many
of the smaller firms are actually owned and operated by larger companies,
including State-owned enterprises and others.
Some property management companies have been known to compel others not to bid for
particular compounds, while others have used their local political influence to
ignore court orders to leave communities when residents wanted to switch firms.

And more than a few communities are dissatisfied with the level
of service they do receive, producing
a nasty spiral whereby residents withhold payment of annual fees as a
protest, and property management companies plead lack of funds and then privatize
space and other assets in compounds to generate revenue they insist is necessary
to sustain operations—but which many residents believe simply go into “little
treasuries” [小金口] for use by
those companies.

Enter the Nanjing government.

Since the beginning of 2017, local officials have sought to
play a more direct role in community decision-making where property management
firms are concerned. In recent months, they’ve met directly with residents in
compounds where oversight and responsibility by companies is seen as lax; advised
owner representative committees about their legal rights to hold these firms
accountable; and followed up when companies have been reluctant to get on the
right path. This is the State siding with unhappy citizens, not trying to restrain them.

Officials are not only concerned about residents getting
angry (some in Nanjing have, and their protests resolved largely peacefully),
but the safety
of facilities. Some inspections have reportedly shown that more than a few
property management companies neglect fire codes
and don’t do enough to maintain safety equipment generally. Authorities know
that Nanjing lacks the necessary fire-fighting infrastructure (it’s run by the
military and dedicated to its protection first) and so a fire in a major
housing complex could easily turn tragic.

There’s also questions about the fiscal soundness of some
property management companies, as rumors abound of some using annual service
fees to invest in financial schemes that may have already turned into scams. At
the end of July, Nanjing authorities indicated
that a general regulation regime would be constructed that would require
property management firms to abide by certain rules and undergo credit
inspections.

And in recent days, a Nanjing government group has created a property
management company for a residential area, to make sure that the necessary
services are being provided under direct supervision by the city. It’s likely a
pilot project, indicating that local authorities are experimenting with taking
over (or least, consolidating) certain firms and doing some (or most) of their work for
them.

The reasoning behind these recent moves, according to
official media, is that neither the market nor a wholesale return to
State-owned housing is sufficient to solve problems caused by property
management companies rent-seeking.

There's no official term for it, though maybe "New Socialism" will work. But this is still very much the Local State stepping in,
taking direct action instead of just hoping for the best. It's not an effort to censor, cement ideological control, or stifle dissent. Instead, this is a local government deciding that it had better start doing what the market has messed up.

It may not be the sort of far-reaching reform that some
might wish for China--especially those who think that the only change worth talking about is regime change. But it’s reform nevertheless--a step forward in at least one city where officials aren't afraid to stride.

[1] Many
observers persist in believing that political activists and social
dissidents--including a
purported feminist movement that no one here has heard of and whose alleged
leaders are overseas--are somehow frightening China’s leaders. How anyone can
possibly discern when leaders here are scared or not is left unmentioned.

[2] Many analysts who look at China equate authority [职权] with legitimacy [合法性]. The
latter is largely a legal term, comfortable for Western conceptions but largely
irrelevant beyond documenting the scope and boundaries of government power in
China. When commentators outside China speak of the Communist Party striving to
maintain “legitimacy”, they’re projecting anxieties that don’t exist among
officials, as well as misunderstanding how politics plays here.